Thursday, April 28, 2011

M&M holds a majority market share (almost 40%) in the tractor industry. They also grew a stupendous 22% in terms of volumes when compared to last year. The volumes include the sales done through Swaraj divison (Punjab Tractors) which is the market leader in many parts on Northern India. Tractor division has always been one of the most profitable arm of the Mahindra Group. But they are facing stiff competition in form of John Deere & New Holland India who have tremendously revised their prices to gain volume in India.

The most promising of the lot were John Deere and New Holland India which grew by about 44% and 40% respectively. Both are infusing world-class well engineered products in the Indian market, at the same time at a very competitive price. They still have a long way to go in terms of penetration in the Indian market when compared to the market leader M&M.

The second biggest tractor manufacturer TAFE group had a decent growth of 17%. Its most famous brand Massey Ferguson (also the name of its partner) has tremendous brand equity among tractor buyers. Its acquisition of Eicher’s Tractor Division (way back in 2005) has also helped it grow inorganically both in terms of volumes and technology.

The increase in buying power of the rural market has also led to a sustainable growth in this segment. We all are well aware that tractor divison was the only sector in automobile market which was not affected by recession.

Escorts and ICML’s Sonalika tractors also had a much sustained growth of 22% & 21% respectively. These two old warhorses of the tractor industry have evolved and are striving their best to retain their market share. HMT is losing its hold and has de-grown. VST tillers have also grown by about 26%.

Overall the Tractor Industry in India has grown by a healthy 24% and this number is surely bound to raise higher this fiscal.

Tuesday, April 26, 2011

An excellent report on the outlook of the Indian Tractor Industry. Great work done by the NITIE students. I'm sure this report will enable us to extract some wonderful insights about the tractor industry in India.

Mahindra, as promised has re-branded its only sedan Logan as Verito (which means TRUTH in latin). Verito is nothing but a Logan with Mahindra Badge. In a recent press announcement the company has revealed the looks and has described Verito as a honest, sensible and dependable car.The new Verito retains the famed strengths of the Logan, while adding a new style with some key changes. Now equipped with several rugged and sporty styling elements.The exterior of this car is quite unique with ski racks and side cladding, which are available for the first time on a sedan in the Indian market. The chrome rear appliqué and rear spoiler increases the car’s premium quotient and gives it a distinctive look at the rear. These new additions on the exterior align with the tough, rugged and sporty DNA of a Mahindra vehicle.

The marketing of the new product will be primarily be done on Social Media Platforms. This is keeping in mind the enormous success of Scorpio, Xylo & Thar in digital platform and the ever-growing fanbase in facebook just adds extra feathers to the achievement. Mr. Rajesh Jejurikar, Chief Executive, Automotive Division, Mahindra & Mahindra Ltd. in the press statement said “The Verito, with its unique value proposition aligns with the Mahindra DNA of offering tough, rugged and sporty vehicles. For the first time, we are using social media platforms to unveil a new product, reflecting alternative thinking. The earlier Logan will continue to get complete service and spares support from us.”
The company plans to leverage on the already revived brand and this step just displays company's focus on the brand and in a way tries to re-instate customers faith in it.

Monday, April 25, 2011

In most of the Indian families, the personal finance is something which is not managed by the couples together. It is only one person who manages the personal finance and money management of the whole family. In most of the cases the male partners and in a very few cases the female partners mange personal finance. Only very rarely both of the partners together manage their personal finance aspects.

What would be the outcome in an organisation where the purchase department works totally independent and without any understanding with the finance department of the organisation? Purchase dept may overspend; finance dept will lose control; misunderstanding and conflicts between both the depts; the result is the organization’s growth gets destroyed.

Similarly, if the personal finance is handled by only one partner, then there could be a lot of mismatch between you and your partner in saving and spending pattern. This will lead to misunderstanding and marital stress. Instead of having independent saving and spending plan, having an interdependent plan will help you in managing your money effectively and achieving your financial goals.

You go out for dinner together. You go to the movie together. Why don’t you manage your personal finance together? This will build money compatibility for you and your spouse. Both of you can have a better relationship and understanding with each other.

Why it is so important?

You may wonder why personal finance should be managed by both of the partners. Here are some points to ponder over;

1)In case of Emergency:

Suppose the partner, who is managing personal finance, met with an accident and need to be hospitalized for one month or so, then how does the spouse will run the show?

During the accident, if the partner has missed his wallet which had all the credit cards and debit cards then how does the spouse block those cards before it is misused? Where does she or he find that information?

In case of emergency, nothing will help except the practice of managing the personal finance together.

2)Real Workable Budget:

When you alone prepare the budget for your family, then you can’t expect your spouse to spend according to the budget. If you prepare the budget along with your spouse, he or she will come forward to help you in saving more.

You just try this. Involve your spouse in budgeting and monitoring the spending. You will see the spending coming down day by day and both of you will start spending consciously.

3)Combined Financial Goals:

It is better to identify the goals of your spouse as well as yours and check that is there any goal which is contradictory to the goal of your spouse.

You may want to retire and settle in the same work city. But your spouse may want to settle in the native place.

You may plan to buy a farm house to spend your leisure. But your spouse may be interested in spending her/his leisure at different places like hill stations and other tourism places. For this goal a time share slot with a resort provider may be suitable.

So identifying and settling your difference of opinion regarding the financial goals at the blueprint level is much easier and cheaper, instead of doing it at the execution level.

Overcoming the barriers:

There are some barriers or objections in involving their spouse in managing personal finance. How to overcome that?

1)No Time:

My spouse is not having enough time to look at these things. ‘No time’ is a false excuse. If it is one of your priorities, then definitely it will somehow find its time. Only thing is you have not realized it as one of your priority. Personal finance is definitely a priority item for each and every family because it is going to secure your future.

2)Not interested:

My spouse is not interested in personal finance. Everyone is interested in their own future and their kid’s future. So logically everyone needs to be interested in personal finance. You need to motivate them and make them understand, how this personal finance management is important in achieving their life goals.

3)Doesn’t know:

My spouse doesn’t know about personal finance. No one has born in this world with the skills of money management. We all learned it here. So why don’t you educate him/her on personal finance. Money management is an important life skill. Everyone should know. You want your kids to manage the money better and wiser. Why don’t we educate our spouse first?

Overcoming the barriers in getting your spouse involved in personal finance management and getting them involved will be a life transforming exercise. Don’t miss it. Together you will be able to achieve your life goals easier and sooner.

Saturday, April 23, 2011

Bolero has been the indomitable leader in this segment. Bolero has re-instated the fact that how VALUE driven Indian market is!!! Mahindra would have never anticipated that its low cost, ingeniously manufactured SUV would drive these volumes. Bolero has proved to be an Alto in the SUV space – As Alto has been an answer to the dreams of the entry-segment car owners, similarly Bolero has succeeded to mark itself as a 6-Lakh rupee FORTUNER in rural markets of India. The product is a sure-shot success even after huge supply constraints and is bound to break all records in near future.

The first 5 ranks have consistently been dominated by:

1. 1. Mahindra Bolero

2. 2. Toyota Innova

3. 3. Mahindra Scorpio

4. 4. Mahindra Xylo

5. 5. Tata Sumo

Toyota has uncovered the vulnerability and uniqueness of the Indian market. It has proved that a major portion of the Indian market now gives more priority to Quality and Comfort rather than price. Innova has become a favorite among big families and in taxi market. Its’ premium pricing has in a way signified international standards, utmost safety and plethora of comfort. The total package has lured a lot of MPV customers and is unswerving in its performance.

The mighty, muscular Scorpio raised Mahindra’s standard in the so-called premium space and has given the company a new recognition. The famous tractor manufacturer has churned and created an aspirational brand for SUV lovers. Its compactness, macho-ness, sturdy design, offroad capability and much efficient engine made it an instant hit in the Indian market. Scorpio has shown enough promise to challenge and shake-up Innova’s 2nd position. Scorpio is now the green-card for Mahindra to enter the international markets and thus expand its presence. We’ll have to see how things would fare after the launch of Force Motors SUV and the much-awaited Mahindra’s World SUV (code-named W201).

Xylo’s success has suddenly threw light on this expanding MUV space and has led a path to the new launches in line (like Nissan’s NV200, Toyota Avanza, Tata Aria). Although Xylo hasn’t been able to make a significant dent in Innova’s market, rather has created a fan-following in the rural upmarket space where demand for spacious and rugged vehicle has shot up. Xylo has also constantly been trying to evolve into the taxi space and is quiet successful in doing that. Xylo in a way has been the poor man's Innova!! It has earned a decent reputation in rural markets and the responsive engine has got it a few fans over Innova.

Fortuner has created a rage and still amazes on how Toyota SUV's have reigned over the minds & hearts of Indian buyers. Remember the equity Land Cruiser enjoys? And Fortuner has utilized this and bringing it in the 20 Lakh Rupee price point has put the sales charts on fire. Endeavour still lacks the muscle and charm that Toyota brings in its product, but has still been able to sell an average 300 no. per month.

My personal views about Aria during the launch was –

“I've tried out the Tata Aria and have to admit that the Tata engineers have done a great job shaping the car, The car looks magnanimous and has a wide range of features within. The 17 inch alloy wheels distinguish it as a macho roadster and the sturdy outer body shell makes it a safe car. 6 airbags, ABS with EBD & TCS tries to justify the price-point. Adapterra 4x4 transmission attempts to infuse off-roading capability and is also successful to some extent. The interiors are much plush and the multiple ac con-vents (even on the door) provides perfect cooling within the car. Multiple utility boxes on roof don't add real value to the utilitarian purpose. With this Tata hopes to attract buyers of sedans, MUVs and SUVs. Aria can said to be a segment creater - 'Crossover segment'.

But my business inference from the visit was -

·Although it is commendable that Tata has produced a segment-definer, it looks the same Indica platform, more of a Bloated Indica to be precise (the view is absolutely personal, I still admire Tata's capability to build perfect VFM cars - Indica & Indigo still sell great numbers!!!)

·The price Tata's are demanding from the product is far above the ground !!! (14.5 Lacks on-road price for a Tata Monster, and that too the base variant - its too much to demand for). This removes the Aria out of the VFM proposition.

·Legroom in the third row is a heart-breaker : It is totally cramped and I expected a lot more from it. Although the overall seat quality was good; I didn't feel that it was apt for long tours/drives.

·I second the point that Tata's CV image will effect this model. People in this segment would still prefer buying a Toyota (Innova - Low End & Fortuner - High End) rather than shelving out their money on Aria.

·Last, but not the least - Aria also doesn't promise best-in-class mileage which can act as another negative factor!!! A mileage of 8-9 kmpl will hamper its reputation more.”

Wednesday, April 20, 2011

How to Retire Early?
The mindset of today’s young professionals is changing radically. They would like to have a semi-retired life in their late forties or early fifties by taking up a hobby instead of a regular job.

Somewhere within all of us, there is a dream to reach a point in life where we have enough wealth to be able to choose the work we would like to do and the pace at which we would like to work, if at all we feel like working; a point also referred to as financial freedom. Financial Freedom is also interpreted as being able to spend whatever amount you like, on whatever things you like, month after month.

Here is a step by step guide to Retire Early.

How long you expect to live?

First of all, you need to decide on “How long you expect to live?” This is going to be the starting point for your retirement plan. This you can decide by your health history and your family health history.

Will you run out of money?

You need to accumulate enough money required to live up to that age. You need to calculate the corpus amount required for retirement based on when do you want to retire?, how much you need to spend every month after retiring?, Inflation, tax, investment returns and the like.

There are two things which can make you run out of money in between. One is inflation and the other one is medical expenses at the old age. So you need to be very careful in assuming inflation when planning for retirement. Also you need to be adequately covered with right health insurance policies.

Retirement corpus Break up:

You need to divide your retirement corpus into two portions. One portion of it is the corpus required to retire at the regular age. It could be 58 or 60. The other portion is the corpus required to live between the early retirement and the regular retirement. Say if you want to retire at 50, what would be the corpus required to live between the age of 50 and the regular retirement age of 58 or 60.

First you need to accumulate money for your regular retirement. Then you need to proceed to accumulate for your early retirement. This way you break your targets and it psychologically gives you a lot of comfort in achieving early retirement.

Don't fall for get-rich-quick schemes

To retire early, definitely you need a sizable corpus. Don’t look for any short cuts and get-rich-quick schemes. Only with the increased risk comes the increased return. If any scheme assures low risk and high return, then it is going to be another scam. So stay away from those schemes.

Don't fear stocks

You need to consider investing in a well diversified portfolio for long-term. Diversified Equity mutual fund schemes are better. By investing in a diversified equity portfolio you will be taking calculated risk and not blind risk. Equities will beat all other asset classes in the long run. So it is an important option for those who want to retire early.

Reduce your annual cash requirements for when you retire by working out a careful budget

The monthly income required after retirement is going to be an important criteria for deciding the retirement corpus. If you are comfortable with lesser income you can retire sooner. So you need to be careful in drawing a budget for cash requirement post retirement.

Investigate a better return on your savings

Better return on your investment portfolio will help you retiring early. So maximize the return on your portfolio as far as possible.

Cut your current spending so you can save more

Money spent is money saved. Spend less; save more; invest smarter and retire sooner. There are more number of ways to spend smarter to save more. (Link this article here http://getahead.rediff.com/slide-show/2010/oct/14/slide-show-1-money-control-emotions-spend-smarter-and-save-more.htm)

Earn more now

Time is money. Don’t waste your time. Invest your time in revenue generating activities. Apart from your regular income source, there are other opportunities which you can exploit. You can create blogs; you can be a freelance writer; you can do internet marketing. There will be numerous opportunities based on your knowledge and skills if you take time to think and implement.

Take advantage of tax-deferred opportunities

Tax deferment is an important tool for early retirement. Tax deferment means less tax now. If you pay less tax and you will have more money to save. You need to pay tax on FDs on maturity even if you renew them. Income funds and MIPs could be a better alternative to this. You need to pay tax only when you actually redeem.

Find out some ways to have an income

Even after retirement you can have an income by way of a hobby or interest. You need not work on a regular schedule. Say you can be a trainer, you can be a blogger, you can be a consultant, or you can be an advisor in your chosen field. It generates money as well as it keeps you engaged after retirement. One of my clients has written a book and he is able to generate income from the copyright of that book year on year. If you are able to generate this kind of income, then you can retire early.

Retiring early is possible for each and everybody. You need to start planning for it little earlier. Professional assistance from financial planners will be of definitely useful to you, if you desire to retire sooner and retire richer.

Saturday, April 16, 2011

Is lack of time making you go crazy in your attempt to plan your finance?

Does your busy professional schedule offer you time to monitor your personal finance?

Balaji is working for an MNC. Today he has got a deadline for a particular assignment. His day is fully packed. First thing in the morning, he receives a mail from his HR Dept stating that today is the last date for producing proofs for tax saving investments; otherwise a huge amount will be deducted from his salary as tax. He wanted to do some tax saving investments urgently and submit the proof on or before end of the day.

Mahesh is an NRI, working for a software company in US. He has got a couple of crores in his overseas fixed deposits giving a return of 1.50% p.a. Returns are taxable. At times, he thinks that the return what he getting is very low. He wanted to check up with a professional financial planner in India. He thinks he will contact as soon as his present project gets completed. Like this he has not contacted any financial consultant for the last 3years because of some reason or the other.

Most of the investment decisions are either taken because of some compulsion or urgency or postponed because of compulsion or urgency in some other area of life. This is because we want to complete the urgent thing first not the most important thing. Many important things that contribute to our overall financial objectives and give richness don’t tend to give any pressure on us. Though they may not be urgent, they are the things that we must give importance and carry out immediately.

We act upon things like pressing problems, deadline-driven projects, and official meetings. We don’t give importance to

prepare for a meeting with a financial planner; appraising a financial planner before making investments

protective activities like taking a term insurance, house holder policy, health insurance;

empowering ourselves by upgrading our knowledge with reference to investments

Why we are not able spend time on important things and spend most of our time on urgent things? Because, we are following a way that focuses on how fast or efficiently we are getting things done. We are not following a way that focuses on why we are doing things.

Take the case of Mr.Balaji. Why didn’t he do his tax planning during the beginning of the financial year itself? Why is he chasing at the last minute? Balaji is much worried about his deadline for assignment than tax planning. As he is making investment urgently, it is difficult for him to choose the right financial advisor and also difficult to judge which one would be the best tax saving option for him. He will be investing with an advisor who can get the investment proof on the same day.

Is this the basis on which we select an investment advisor? Will the relationship of Mahesh and this advisor be a long term one? Will this investment is going to be of any help to Balaji in meeting the higher education expenses of his son after 15 years?

Coming to the case of Mr. Mahesh, he had couple of crores at 1.5% pre-tax return. He could have tripled his returns by investing in an Indian liquid fund which is very safe. There are far better investment options available for him to choose. But he has settled for 1.5%.

If he could have spent a day or two in carefully choosing the right financial advisor and investment product he could have earned more. The earning opportunity which he missed with his investments might equal to his 6 months or 1 year salary.

He could have generated that passive income equivalent to 6 month or 1 year salary without any pressure from the top management; without meeting any deadlines by just spending a day or two.

We are all working hard for money. Is our hard earned money is working for us or lying in our SB a/c or really growing?

We find a ladder and see there are so many people trying to reach the top of the ladder faster. Then we also follow the group, deadlines to be met in each and every step; focusing more on reaching the top and finally reached the top. Only after reaching the top, we realize that we have come to a very wrong place or a place which is not worth missing so many things and opportunities in life. This is how the today’s world is.

Nothing wrong in working harder or focusing more on completing the assignment or spending more time on finishing the project on deadline. These are all good thing to do. But always remember, there are better and best things to do. We keep too many good things ahead of a few best things.

Setting up financial goals; working out a plan for achieving those goals; and implementing those plans are all best things to do in life. You know in advance where you want to reach exactly, by doing this exercise. As we progress, we enjoy the journey. As we reach the place, we really feel happy and we have not missed any important thing on the way.

Procrastination and not giving priority to financial goals and investment plans are costliest mistake one can take. So let us stop procrastinating and give priority to our financial goal setting and investment planning. Then life will be really so beautiful.

Friday, April 15, 2011

Prabu was a college student till yesterday. Today he has got a job. He has changed his costume from T-shirt and jeans to a formal wear with a tie. When he got his first pay cheque, his father advised him to save, his girl friend asked him to take her out on a date, and his friends wanted a party. Prabu was totally confused what to do with his first salary. What are all his actual priorities? Let us help him by laying out a step by step initial financial plan for him.

Get a PAN Card:

PAN Card is an ID card issued by income tax department. This card is useful in filing your Income Tax returns. Apart from this, the PAN card is very much useful in opening a bank a\c, demat a\c, investing in mutual funds and the like. The required documents for getting a PAN card is a passport size photo, address proof and an identification proof. You need to apply with either UTI or NSDL. They are the two approved agencies by income tax department for issuing PAN card.

Personal Accident and Disability Insurance:

Almost every day you can find a news column about road accident. It may be your colleague, your distant relative, your neighbor, your friend, your classmate. The stories of such incidents give us a reminder that the accidents can happen to anyone. The impact of these accidents on ones working life could be huge. Some accidents could reduce our employability temporarily or permanently. Personal accident and disability insurance policies will cover the financial losses arising out of accident and disability.

You need to decide the coverage amount of this policy based on the estimated loss you may suffer because of accident. That is how much loss you may incur from employment temporarily or permanently because of the accident. This will cost you approximately Rs.1500 p.a for a coverage of Rs.10 lakhs.

Health Insurance:

Most people don’t think about health insurance very often. But it comes to mind first when a loved one is sick. Under health insurance, the insurance company pays the medical bills if the insured person becomes sick and hospitalized. Health insurance can protect a family from financial damage in case of severe and serious illness.

If you have a health insurance from your employer, that may not be sufficient. Employer may cover the employee and not his family members. And moreover these policies are not portable and cannot be individualized if you leave the job. Employer provided policies cannot be transferred to another employer in case you switch your job. Also employer provided policies will give you coverage as long as you are employed. Once you retire you may not be having coverage. It is really unfortunate that only after your retirement you need health insurance at the most. If you plan to take a fresh policy after retirement, insurance company will not cover the pre-existing diseases at that point in time. Though your employer provides a health insurance policy it is better for you to take a separate health insurance policy at least with a small amount of coverage.

The coverage amount of the health insurance policy need to be decided based on your health consciousness, your family health history, and the class of hospital you choose for treatments.

Term Insurance:

Generally as a beginner, there will not be any requirement for any life insurance. But if your parents are financially depending on you, then you need to cover yourself with life insurance. As a breadwinner, today you are there for your family to provide a lifestyle. In case of any mishappening to you, your family members should not compromise on their lifestyle. That is why it is advisable to cover yourself with life insurance if you have dependents.

But don’t fall prey for ulips. Go for a pure term insurance policy. These policies give you a high coverage with low premium. The premium for a sum assured of Rs.10 lakhs will cost a 25 year old only Rs.2500 p.a. approximately.

Emergency Reserve:

Once you have completed the above obligations, you need to build an emergency reserve or contingency fund. One aspect of financial planning involves planning for situations where there could be a temporary break in one’s professional income. This could happen, amongst other reasons, due to ill health or could even be self opted. Such planning requires creation of contingency fund. The size of a contingency fund is linked to one’s estimate of what could be the maximum duration of such a break. For instance some people plan for the possibility of a 3 months break, others for 6 months.

This emergency fund gives a psychological security to you. In case you need to quit you r present job and need to search a new one, you can do that comfortably and confidently as you have an emergency fund for the intermediate period. You need not panic. If you have created a contingency fund, in the event of any emergency you need not pre-close your other investments and hence you avoid paying penalty or booking losses.

Tax Planning:

You can save under section 80 C up to Rs.120000. Out of this Rs.20000 need to be invested in the infrastructure bonds and the balance Rs.100000 can be invested in NSC, PPF, insurance premium, and ELSS mutual funds., You can give maximum allocation to ELSS mutual funds, as you are so young and in the beginning of your career.

Other goals:

You may have other goals like buying a laptop, higher studies, and vacation. You need to plan for all these goals. You need to keep in mind two things before deciding an investment. They are your risk tolerance and time horizon. How much risk you are afford to take and psychologically comfortable in taking? When do you need this money back? Based on the answers to these questions you need to choose the right kind of investment plan.

Plan out your work and work out your plan. Normally we don’t plan to fail, but we fail to plan.If you work on your financial plan, when your friends are partying and taking their girlfriends out, you will be definitely going to be retired richer than your friends.

Thursday, April 14, 2011

India has traditionally been a hatchback market. Even now (Mar-11), Maruti sold around 38000 Altos', Hyundai's i10 sold around 14000 units. Luxury car manufacturers had always refrained from the conservative Indian market and had questioned its potential. But, time changed and so did the Indian Automobile scenario. We saw a 20-Lakh SUV (Fortuner) burn the sales chart and command a waiting period of more then 6 months. Toyota's Fortuner has now averaged around 1000 units/month. A section of the Indian market has rapidly evolved to become luxury & brand conscious rather then price sensitive.

BMW is one of the manufacturers who has rightly understood the above phenomena and hit the nail on its head. Its aggressive product and pricing policy has made it leapfrog Mercedes in terms of sales and value creation. BMW's has again played its price vs value game with its SUV offering X1 and is reaping immediate results. The vehicle is in huge demand now and promises to set new benchmark in sales in times to come. Mercedes still stands as epitome of luxury and its loyals are undeterred by sportiness of BMW or cheekiness of Audi. C-class yet regains its leadership in the segment and gives stiff competition to its peers. Whereas 5-series proves itself to be a complete package and oversells E-class by a margin.

Volkswagen's Beetle did an excellent 21 numbers instead of its humongous price of around Rs. 24 Lakh (on-road). But Phaeton sale was eye-popping - it did 15 no.!!!

XC 60 & XC 90 did a satisfactory figure of 37 and 7 respectively. Volvo is slowly finding confidence in Indian market - this can be further re-instated with the launch of its C-class, 3-series rivaling S60 launch in India.

Porsche's much debated product Cayenne sold around 9 no.!!! Whereas other models together did around 6 no. This not only depicts Indian love for SUV's but also signifies the value of practicality in Indian market.

Overall, the sales was very encouraging and demonstrated double and triple digit growth for these luxury car manufacturers. This news is further strengthened by the arrival of super-luxury brands such as Maserati and Infinity in Indian market this April.